Tuesday, January 16, 2007

NY Times: DC Condo Market Has Collapsed

An interesting article in today's NY Times. According to the reporter, condo developers in DC and other cities are either converting their projects to apartments or are cancelling them altogether.

Since the middle of 2006, the frenzied condominium market here [DC] and in several other big cities like Las Vegas, Miami and Boston has collapsed. Once roaring sales have slowed to a trickle, sparse inventory has mushroomed into a glut and soaring prices have flattened out and started falling.

The graphic accompanying the story depicts the same trend I've been seeing as I collect data for DCHomePrices.com: significantly lower volume in 2006 compared to 2005. However, it also shows the dramatic growth in unsold inventory.

One effect we may see as a result of this sudden glut of new apartments is lower rents in the DC metro area.

Industry analysts also point out that rents may start sagging if too many condos are converted into apartments too quickly. While rents were rising at a robust 6.1 percent annual pace in the Washington area late last year, according to the Bureau of Labor Statistics, some buildings in the suburbs have recently started promoting move-in specials and other incentives to lure renters.

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